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24th April, 2019 by Charlotte Fleetwood
In the second of our articles about legislative changes affecting residential landlords, we look at the Tenant Fees Act 2019 (“the Act”) which is intended to improve residential letting for tenants and limit the payments landlords and agents can charge in connection with residential tenancies.
When does the Act come into force?
1 June 2019 for new tenancies but there is a transition period to allow time for landlords and agents to review existing agreements and change them if necessary. The transition period is between 1 June 2019 to 31 May 2020 and after this date any provision in an existing tenancy that is in breach of the Act will no longer be legally binding and enforceable.
What does this mean for new and existing tenancies?
From 1 June 2019 all new tenancies must comply with the Act which means that landlords and agents can only charge “permitted payments”. Landlords and agents will therefore be responsible for many of the costs associated with setting up, renewing and ending a tenancy, including those relating to referencing, legal fees and inventories. If a tenancy was entered into before 1 June 2019 landlords and agents can continue to charge fees referred to in the existing tenancy agreement, but only until 31 May 2020. From 1 June 2020 landlords and agents will be prohibited from charging any payments except those which are expressly permitted under the Act. Any provision in a tenancy which refers to a prohibited payment will no longer be binding after this date.
What tenancies does the Act apply to?
All assured shorthold tenancies (except social housing or long leases), tenancies of student accommodation and licences to occupy housing in the private rented sector.
Permitted Payments: What payments can a landlord or agent charge?
Prohibited Payments: What payments are prohibited?
The only payments that can be charged in connection with a tenancy are on the above list. All other payments are prohibited including (but not limited to):
What if a landlord makes a charge which is not a “permitted payment”?
Any charge made which is not permitted under the Act will prevent the landlord from using the section 21 of the Housing Act 1988 eviction procedure, until such payment is repaid. A breach of the Act by a landlord or agent will also be a civil offence with a financial penalty of up to £5,000. If a further breach is committed within 5 years of the financial penalty then this will be a criminal office with an unlimited financial penalty.
If you are a landlord or agent who deals with tenancies of residential properties in the private sector, you should familiarise yourself with the government’s “Guidance for landlords and agents” (which you can find here https://www.gov.uk/government/publications/tenant-fees-act-2019-guidance) and ensure that you are reviewing your tenancy agreements now, in readiness for when the Act comes in to force. If you need help and further advice, please get in touch with Charlotte McClean (firstname.lastname@example.org).
The information on this site about legal matters is provided as a general guide only. Although we try to ensure that all of the information on this site is accurate and up to date, this cannot be guaranteed. The information on this site should not be relied upon or construed as constituting legal advice and Howes Percival LLP disclaims liability in relation to its use. You should seek appropriate legal advice before taking or refraining from taking any action.